March home sales cooled

Baltimore-area prices, turnover still on the rise

Demand far exceeds supply

Pace dips as rates climb

average price $258,924

April 08, 2005|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

The temperature of the red-hot Baltimore-area real estate market dropped a few degrees in March, as the growth in home sales slowed and prices, though still advancing strongly, did so at a less torrid pace, statistics released yesterday showed.

Whether the month marked a blip or the beginning of a cool-down won't be known for months, but housing experts expect rising mortgage rates - though still low by historical standards - to weaken demand slightly.

Sales in the Baltimore area were 8.7 percent higher than in March 2004, according to data compiled by Metropolitan Regional Information Systems Inc., a Rockville company that tracks sales. That was a slower rate of growth than the double-digit increases posted in all but one month since May.

The average sales price of a home in the region jumped 16.7 percent to $258,924, a slower rate of increase than in February, when home prices soared 23.3 percent, and down from last March, when prices advanced nearly 20 percent.

Average prices have gone up more than 20 percent on a year-over-year basis in seven of the past 12 months, statistics from MRIS show.

"The market is staying steady, not growing in leaps and bounds," Cindy Ariosa, a vice president for the Baltimore region for Long & Foster, said yesterday. "To have any increase over last year's record-breaking increases is phenomenal."

"The majority of new-home buyers have taken advantage of low interest rates, because rates have been so low that the influx of buyer pool is starting to be limited," Ariosa said. "We still have plenty of buyers out there, but not in the droves" of past months.

On Wednesday, mortgage giant Freddie Mac raised its forecast for mortgage interest rates, predicting that 30-year, fixed-rate loans will average 6.2 percent and rise to about 6.4 percent by the fourth quarter. That was up from its prediction a month earlier of a 6 percent average.

The National Association of Realtors estimates that sales of previously owned homes might slow this year to 6.57 million from a record 6.78 million last year, and that could be healthy for the market, said Lawrence Yun, a senior economist for the National Association of Realtors.

"It's welcome news, given that we have had an imbalance in the market with too many buyers and too few sellers," Yun said. "Now that the buyers are a little more restrained, it's a healthy sign that the market is coming back into balance."

In coming months, "both the sales and home prices will be higher compared to a year ago, but the rate of increase will be steadily slowing," Yun said.

But for now, the market remains more advantageous to sellers, with the low housing inventory boosting prices, experts said. Homes listed for sale were on the market an average 55 days in March, a day less than they were a year earlier.

"The pace of the sales wasn't that great because we just don't have the supply; we have more demand than supply," said Melvina Brown, president of the Howard County Association of Realtors and an agent with ReMax 100 in Ellicott City. "Because we don't have the supply, people who are selling their homes can ask for an increase in price."

A home in good condition that is realistically priced is getting multiple offers, said Georgiana Tyler, a branch vice president for Coldwell Banker at the Roland Park/Wyndhurst Station office. In the past month, a house in Charles Village drew 11 offers, she said.

Joseph Spann was astonished that his four-bedroom house in Ellicott City sold in less than a week. The buyer is to settle on the 10-year-old home this month.

"A lot of people came through," said Spann, who, with his wife, hopes to buy a smaller home with less maintenance now that their three children have grown. "It really surprised me how fast the house was sold. It was a good thing."

Spann said he put his home on the market now to take advantage of the steep price appreciation. The home he bought 10 years ago for $215,000 sold for $520,000.

In Howard County, the average sales price of a home rose 19.2 percent in March, to $404,596. The average sales price rose slightly more in Baltimore County, by 19.43 percent to $248,331. Home values rose by 22.5 percent in Harford County and by 24.45 percent in Anne Arundel, which had the highest average sales price increase.

Baltimore City had the biggest gain in the number of homes sold, a 19.8 percent jump, but the average sales price was more stable, rising just 6.82 percent, to $128,006.

Some agents said they expect the pace of sales and price growth to start picking up again as more people put their homes on the market for the spring.

"We are in the midst of a very strong spring market," Tyler said. "Activity has increased from the standpoint of increased listings of houses coming on the market. Interest rates do not seem to be deterring buyers."